Chargé Wilson to the Secretary of State.
Tokyo, April 5, 1906.
Sir: I have the honor to confirm the legation’s cipher telegram of the 27th ultimo, reading as follows:
March 27, 10 p.m.
Sec. State, Washington:
To-night the Japanese Parliament has passed a bill for the government purchase of all the principal railways. The cost is estimated at about 300,000,000 yen, payable in 5 per cent government bonds. A tariff bill, moderately tending toward protection, was also passed. Consultation with American merchants has confirmed my opinion that American trade is not materially affected. Parliament formally closes to-morrow.
The railway purchase bill had been considerably amended by the House of Peers, who struck out 15 small railways, mostly branch lines, from those private lines to be purchased by the Government; extended the period for the completion of the purchase from five to ten years, and that for payment from two to five years; and introduced a provision for appeal to the ministries concerned in case of dissatisfaction on the part of a company with the terms fixed upon by the commission.
The minister president of state appeared on the floor of the house when this bill was taken up on the evening of the 27th ultimo and voiced the Government’s recommendation that the amendments be accepted.[Page 987]
The closing scene of the twenty-second session of the Japanese Diet which then followed is said to have been the most tumultuous so far witnessed in that body. When the leader of the Constitutionalist party in the House of Representatives moved that the railway purchase bill should be put to a vote without discussion as it had been sent back, amended by the House of Peers, and the chairman said that the motion had the approval of the House, there was much uproar and a personal encounter occurred between a group of government supporters and opposition members, which had finally to be quelled by the police. After this scene the opposition members withdrew or abstained from voting and the bill was passed unopposed.
The railway state ownership law, as it was passed, a translation of which I have the honor to forward herewith, shows the following salient features:
All of the principal private railways are to be purchased by the State between the years 1906 and 1915.
The prices to be paid are based, first, upon the average rates of profit, with reference to the cost of construction, during the six semiannual business terms between the second half of 1902 and the first half of 1905, multiplied by the cost of construction on the day of purchase and also by 20. For example, the cost of construction of a road at the time of purchase being $5,000,000, and the average rates of profit during said periods being 6 per cent thereof, the price that the government would be required to pay would be $6,000,000 (5,000,000X.06X20). In addition the government will be obliged to purchase material in stock and not yet used, paying for its actual cost by means of government loan bonds at their average current market value during six months preceding the purchase of the road.
The purchase price of any road shall be paid within five years from the date of purchase with 5 per cent government loan bonds at face value, and from the date of purchase until delivery of the bonds the government shall pay interest on the purchase price at the rate of 5 per cent.
Seventeen private railways are named in the law as subject to purchase and the cost is estimated at about 430,000,000 yen ($215,000,000.)
The estimate of 350,000,000 yen, which I had directly from the minister for finance, and which was given in the legation’s telegram, seems to fall short of the probable price to be paid by the Government.
On March 30 there was also promulgated a law, passed at the session just closed, for the purchase by the Japanese Government during the current year of the Seoul-Fusan Railway, in Korea. This company’s property includes the line between Seoul and Chemulpo. The purchase price is to be calculated, as to the line between Seoul and Fusan, on the basis of 6 per cent of its paid-up capital, multiplied by 20, and as to the line between Seoul and Chemulpo, on the same basis as is provided for in purchasing private railways in Japan. This price is to be paid within two years in government 5 per cent loan bonds at their face value. This issue of bonds, it is estimated, will amount to about 20,000,000 yen ($10,000,000).[Page 988]
The tariff measure mentioned in the legation’s telegram, confirmed above, will be reported in a separate dispatch when the correction of our translation is completed.
On the morning of March 28 the Diet was formally closed by imperial rescript.
I have, etc.,